NAB recognises that climate change is one of the most significant challenges to society and the economy. Financial regulators have also acknowledged climate change is a systemic financial risk which they are incorporating into supervisory frameworks.
We support the transition to a low-carbon economy, and will seek to manage our portfolio to align with the Paris Agreement goal of limiting global warming to less than two degrees Celsius, preferably to 1.5 degrees Celsius above pre-industrial levels. We will do this while supporting security of energy supply in Australia and New Zealand, and working with customers, related suppliers and their employees and communities in which they operate. We will review targets regularly against the latest global climate scenarios and relevant technology developments.
NAB’s updated climate strategy covers:
Supported by:
NAB’s updated climate strategy aligns our long-term goals with the United Nations’ Principles for Responsible Banking, the Paris Agreement and the United Nations Sustainable Development Goals where we expect to have the biggest impact. These include SDG #7 ‘Affordable and clean energy’ and SDG #13 ‘Climate action’.
A long-standing objective of our climate change strategy has been to learn by doing and then incorporate this knowledge into how we manage environment, social and governance (ESG) risks and provide products and services to assist our customers.
For more details about our climate change strategy and governance refer to our our 2021 Annual Review (pages 29-36).
We were the first Australian bank to sign the Collective Commitment to Climate Action, incorporating a range of requirements to align our business with efforts to limit global warming to well-below 2 degrees Celsius, striving for 1.5 degrees Celsius. To achieve this, we have a goal to align our lending portfolio with net zero emissions by 2050.
We will support customers to recognise the risk of climate change and are working with our customers to understand and support their transition plans. We have progressed our work with 34 of 100 of our largest greenhouse gas emitting customers to support them in developing or improving their low-carbon transition plans by 30 September 2023.
NAB also provides finance to help customers reduce their emissions with tailored products and services, in 2021:
We reached a cumulative total of:
$31.7 billion to support green infrastructure, capital markets and asset finance.
$24.6 billon to provide mortgage lending for new dwellings and significant renovations for 6-Star residential housing in Australia.
We reached the milestone of 150 renewable energy transactions ($11.5 billion) completed around the world since 2003.
We completed Australia's first ESG-linked derivative.
We are actively engaging in a range of partnerships designed to support customers with their transition plans:
Joining together with a group of international peers – British bank NatWest Group, Canadian Imperial Bank of Commerce and Brazil’s Itaú Unibanco to develop a global carbon platform using distributed ledger technology known as ‘Project Carbon’. Its purpose is to create a transparent and liquid marketplace for voluntary carbon credits. Since the project was publicly announced in July 2021, it has completed a successful pilot trade; with further pilot trades to be executed over the coming months.
Working with researchers from the Food Agility Cooperative Research Centre to develop a tool that catalogues and reviews investment opportunities for Australian farmers that support them to mitigate emissions and to adapt to the physical risks of climate change.
Supporting ClimateWorks Australia’s development of a natural capital catalogue which defines what natural capital metrics can be measured across Australian farms and how they can be measured. The next phase of this work in 2022 will involve piloting the metrics on participating farms.
As part of NAB’s phased review of carbon intensive, climate sensitive and low-carbon sectors the following coal-related exposure cap, and ESG-related credit policy and risk settings have been implemented:
Capping thermal coal mining exposures at 2019 levels, reducing these exposures by 50% by 30 September 2026, intended to be effectively zero by 30 September 2030 (apart from residual performance guarantees to rehabilitate existing coal assets).
We will not finance new or material expansions of coal-fired power generation facilities.
We will not finance new thermal coal mining projects or new-to-bank thermal coal mining customers.
We will not finance oil / tar sands extraction projects.
From 2022, we will separately report residual performance guarantees within our thermal coal exposures. We recognise that currently there are no readily available substitutes for the use of metallurgical coal in steel production. We will continue providing finance to our customers in this segment, subject to enhanced due diligence which further considers underlying environmental, social and governance risks.
In 2021, NAB completed its risk review of the oil and gas sector1. The oil and gas review resulted in the following oil and gas related exposure cap, and ESG-related credit policy and risk settings:
Capping NAB’s oil and gas exposure at default2 at USD2.4 billion3, and to reducing NAB’s exposure from 2026 through to 2050. This measured re-orientation of client activity will ensure NAB can continue to support clients actively working on their transition strategies and plans.
We will only consider directly financing greenfield gas extraction in Australia where it plays a role in underpinning national energy security.
We will not directly finance greenfield gas extraction projects outside Australia.
We will continue to support integrated liquefied natural gas (LNG) in Australia, New Zealand, Papua New Guinea and selected LNG infrastructure in other regions, with such exposures to be included within the oil and gas exposure cap.
We will not directly finance greenfield oil extraction projects or onboard new customers with a predominant focus on oil extraction.
We will not directly finance ultra-deep water oil and gas extraction projects.
We will not finance oil and gas extraction, production, or pipeline projects within or impacting the Arctic National Wildlife Refuge area or any similar Antarctic Refuge.
Important information:
1. For the purposes of this review oil and gas included: oil and gas extraction (upstream); liquefied natural gas (LNG) production (not at refineries– downstream LNG); and LNG production at wellhead (integrated LNG).
2. An estimate of the credit exposure amount outstanding if an obligor defaults. EAD is presented net of eligible financial collateral.
3. The cap of USD2.4 billion was determined giving consideration to the three year average exposure up to 30 September 2021 due to COVID impacts. Use of USD for the purposes of this cap is to account for currency movement because the majority of the portfolio is USD denominated. From 2022, oil and gas Exposure at Default will be reported in USD.
In 2021, we achieved a 55% reduction in our Scope 1 and 2 GHG emissions included in our science-based target compared to our 2019 baseline. This compares to a targeted reduction of 51% by 30 June 2025. Emissions reductions in 2021 have been greater than expected due to the impacts of COVID-19 restricting business activities. This was despite taking into account emissions generated by our colleagues working from home, noting the substantial shift in where work happens. Working from home emissions increased from 3,597 tCO2-e in 2020 to 15,744 tCO2-e in 2021.
We do not expect all of the reductions achieved in 2021 to be permanent. Initiatives likely to result in permanent emissions reductions include energy efficiency initiatives, sourcing more renewable energy (as part of our target to source 100% renewable electricity by 30 June 2025) and consolidating major commercial buildings in Melbourne and Sydney.
A science-based emissions reduction target is one that is consistent with what science says is necessary to keep global warming below the threshold of two degrees Celsius.
Our target covers:
This target aligns with a 'Well Below 2° Scenario' under the Paris Agreement and has been prepared in accordance with the Sectoral Decarbonisation Approach (SDA) 'Services Buildings’ methodology published by the Science-Based Target initiative.
We have adopted the Sectoral Decarbonisation Approach’s ‘Service Buildings’ methodology1 as the most appropriate given the nature of our business operations. Our original target was submitted to the Science-Based Target Initiative for informal review, and they have confirmed that the target is considered science-based.
We have not set a target for Scope 3 (value chain) emissions, as there is currently no standard framework or agreed methodology for science-based targets for finance-related activities. We have participated in the United Nations Environment Program Finance Initiative/World Resources Institute/2o Portfolio Carbon Initiative, which investigated the development of standardised approaches to disclosure on carbon-related risk exposure and performance for financial institutions. We welcome the opportunity to continue to participate in future developments in this area.
We report on our progress against our science-based target in our regular annual carbon reporting.
Important information:
1. The Sectoral Decarbonisation Approach (SDA) is a methodology that allows companies to set emission reduction targets in line with a 2°C decarbonisation scenario. It is based on the 2°C scenario (2DS) developed by the International Energy Agency (IEA) as part of its publication, Energy Technology Perspectives.
Climate change is a significant risk and complex challenge requiring action at all levels – local, state, national and international - and by all stakeholders.
We believe the financial sector has an important role to play in assisting the transition to a low-carbon economy, through the energy we purchase directly and financing. This transition needs to be considered and balanced, supported by a stable policy environment that provides investment certainty over time.
NAB has adopted three “We Mean Business” Coalition climate change aims1 to recognise the role we can play in supporting the transition to a low-carbon economy that limits global warming to less than 2°C. We’ve taken further action that show our intention to keep taking a leadership role, through how we source energy for our operations and support our customers through financing activities.
1. Undertake financing activities of AUD $70 billion over the ten years to 30 September 20252 to help address climate change and support the transition to a low-carbon economy
In 2020, we set an environmental finance target of $70 billion by 30 September 2025 which includes:
Our environmental financing activity includes:
| Environmental finance by lending category | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | Total ($bn)* |
|---|---|---|---|---|---|---|---|
| Lending for green commercial buildings | 2016 0.2 | 2017 0.0 | 2018 0.0 | 2019 0.5 | 2020 0.5 | 2021 1.3 | Total ($bn)* 2.5 |
| Specialised lending, corporate and securitisation lending | 2016 0.7 | 2017 1.6 | 2018 2.3 | 2019 2.6 | 2020 3.1 | 2021 3.6 | Total ($bn)* 13.9 |
| Asset finance | 2016 0.1 | 2017 0.0 | 2018 0.2 | 2019 0.0 | 2020 0.0 | 2021 0.03 | Total ($bn)* 0.3 |
| Green term deposits | 2016 0.0 | 2017 0.0 | 2018 0.0 | 2019 0.4 | 2020 0.0 | 2021 0.10 | Total ($bn)* 0.5 |
| Green bonds | 2016 0.4 | 2017 1.7 | 2018 2.7 | 2019 0.0 | 2020 0.0 | 2021 0.0 | Total ($bn)* 4.8 |
| Advisory activities, underwriting and arranging | 2016 0.0 | 2017 0.2 | 2018 0.3 | 2019 3.6 | 2020 2.0 | 2021 3.6 | Total ($bn)* 9.7 |
| Lending to support 6-Star residential property development | 2016 5.7 | 2017 2.8 | 2018 4.0 | 2019 3.6 | 2020 3.3 | 2021 5.2 | Total ($bn)* 24.6 |
| Progress towards $70bn target | 2016 7.1 | 2017 6.3 | 2018 9.5 | 2019 10.7 | 2020 8.9 | 2021 13.8 | Total ($bn)* 56.3 |
* Represents total cumulative flow of new environmental financing from 1 October 2015.
Further information on how we calculate our environmental financing is outlined by category in our Environmental Financing Methodology (PDF, 329KB).
For more details about our environmental financing refer to our Environmental Products and Services, our Sustainability Data Pack (XLSX, 865KB) and our Annual Review (PDF, 2.3MB).
2. Source 100% of our Australian electricity requirements from renewable energy sources by 30 June 2025
We joined the RE100 initiative in 2019 and have a target to source 100% of NAB electricity from renewable sources by 30 June 2025. We have made significant progress in 2021, increasing the proportion of electricity from renewable sources to 31%.
Sourcing 100% of the electricity we need from renewable energy sources will continue to reduce our carbon emissions and help scale-up Australian-based low-emissions infrastructure and renewable energy generation.
3. Engage responsibly on climate policy
We will continue to engage in dialogue with key stakeholders, including customers and the wider community, to help inform how we advocate on climate policy with all levels of government. We will also ensure that our engagement on climate policy is co-ordinated and consistent and we will communicate our position, actions and outcomes annually through our CDP climate change survey response and annual report suite of documents.
4. Report climate change information through mainstream reporting channels and increase our carbon risk disclosure in half and full-year results and annual reporting, incorporating stakeholder input
Consistent with providing transparent and integrated reporting, we are identifying, developing and implementing ways to improve disclosure on carbon risk exposure through collaboration with other financial institutions, both in Australia and internationally. We have publicly reported on our GHG emissions since 2003. We are aligning our GHG reporting with internationally recognised climate change reporting frameworks, such as the Climate Disclosure Standards Board’s Climate Change Reporting Framework and the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). We continue to incorporate disclosure of relevant climate change related information in NAB’s Annual Financial Report and have included carbon-related disclosures in our Half and Full Year Investor Presentations since May 2015.
5. Putting a price on carbon and align to the UN Global Compact’s business leadership criteria on carbon pricing
We first established an internal carbon price in 2010, as part of action to achieve and maintain carbon neutrality. This has helped to drive investment in energy efficiency initiatives and helps us to achieve GHG reduction targets. We will continue to maintain the use of an internal carbon price and publicly communicate our understanding of how market mechanisms can help achieve GHG reductions. NAB will also continue to disclose, in our annual CDP climate change survey response and other relevant corporate publications, how we use our internal carbon price.
6. Provide transparent and integrated reporting which means we are working to identify, develop and implement new ways to deliver on carbon risk disclosure
We continue to respond to the CDP Climate Change Survey and have maintained our Climate Active Certification in Australia.
In 2019, we signed up to the UN Principles for Responsible Banking.
7. Collective Commitment to Climate Action
NAB joined the Principles for Responsible Banking Collective Commitment to Climate Action (CCCA) in November 2019. The CCCA requires the NAB Group to align its lending portfolio to net zero carbon emissions by 2050. This will involve NAB: (a) setting targets to align our lending exposures to support the low-carbon transition and the Paris Agreement and (b) developing sector-specific plans to support our clients in accelerating the low-carbon transition.
NAB has submitted its second annual report on progress to the United Nations Environment Programme Finance Initiative (UNEP FI) as part of meeting its CCCA obligations (see page 24 of our Annual Review). NAB are working closely with 100 of our largest greenhouse gas emitting customers to support them in developing or improving their low-carbon transition plans by 30 September 2023. In 2021, we have progressed with 34 out of 100 of those customers.
Important information:
1. Actions 3, 4 and 5 adopt three of the CDP (formerly the Carbon Disclosure Project)-led “We Mean Business” Coalition global climate change aims.
2. Represents total cumulative new flow of environmental financing from 1 October 2015. Refer to our 2021 Sustainability Data Pack for a further breakdown of this number and reference to how progress towards our environmental finance target is calculated
In 2010, we became the first Australian owned bank to achieve carbon neutrality under the Climate Active (then National Carbon Offset Standard (NCOS)) Carbon Neutral Program. In 2021 we celebrated 11 years of carbon neutrality. We achieved this through a concentrated focus on energy efficiency, the use of cleaner energy sources, and the purchasing and retirement of offsets to neutralise remaining emissions.
We define carbon neutrality as a process involving five steps:
Maintaining our carbon neutral status is an important part of our strategy to reduce our climate change impact. It also illustrates our objective to 'lead by example' in the delivery of our Environmental Agenda.
We've been operating on a carbon neutral basis (meaning our net emissions of greenhouse gas from our global operations – as defined in our carbon inventory - have been zero) since 1 July 2010.
All colleagues are provided mandatory annual Risk Awareness training, and in 2021, NAB’s annual Risk Awareness training included a refreshed climate risk module to help colleagues understand:
The training also provided examples of climate-related physical and transition risks to help colleagues understand the impacts of climate change on our business, customers, and the communities in which NAB operates.
In addition, the Board incorporated two climate change sessions into its development agenda in 2021.
Our carbon inventory includes greenhouse gas emission sources from operations in Australia, Asia, New Zealand, the United Kingdom and the United States.
Work on our carbon inventory is ongoing. For some emissions sources, it’s difficult to get access to the activity data needed for accurate greenhouse gas calculations. However, we can provide a picture of the items in our inventory that have been calculated for each of our businesses.
Download our emissions sources report (PDF 304KB).
Scope 1 and 2 emissions
The boundaries for Scope 1 and 2 emissions have been determined using an operational control approach. More specifically, in Australia and the UK, the boundary requirements for most Scope 1 and 2 emissions are covered by the regulatory requirements of the National Greenhouse and Energy Reporting Act 2007 (Cth) (Australia) and the Streamlined Energy & Carbon Reporting (SECR) requirements which are implemented through the Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 (United Kingdom).
Using these regulatory reporting requirements to define our Scope 1 and 2 emissions and boundaries for reporting helps support us to meet our compliance obligations and ensures we are aligned with our regulatory reporting requirements.
Download details about our methodology and emissions factors (PDF 146KB).
Scope 3 emissions
For Scope 3 emissions, we’ve used an operational control approach and developed principles and criteria - outlined in our Group Environmental Reporting and Offset Management Policy (PDF, 97KB) – to define the emissions sources included in our carbon inventory.
A summary of the key methodologies, assumptions and emissions factors applicable to each emission source reported by our businesses are provided below.
Reporting Library
Financed emissions estimate
In 2020, we completed an initial estimate of attributable financed emissions, which included five key segments of our Australian lending portfolio which resulted in estimated attributable financed emissions of 18,437,681 tCO2-e. This year, we have expanded our work to cover an additional three sectors (transport, heavy manufacturing, and small business to medium businesses in the commercial and services sector1 which resulted in estimated attributable financed emissions of 10,885,840 tCO2-e. The reduction in estimated attributable financed emissions between 2020 and 2021, is primarily due to a methodological change in the calculation of attributable financed emissions for residential mortgages to align to the residential mortgages methodology published by the Partnership for Carbon Accounting Financials.
Further details on estimated percentage coverage, attributable absolute emissions and intensities per sector can be found in our 2021 Annual Review.
Download details about our financed emissions estimate methodology (PDF, 791KB).
Important Information:
1. Based on Australian Energy Statistics data for Commercial and Services sectors and aligned to1993 ANZSIC classifications F, G, H, J, K, L, M, N, O, P and Q.
Our Group Environment Reporting and Offset Management Policy (PDF, 97KB) helps us make sure that we purchase offsets that are real, quantifiable, additional and permanent. Each year, we also ensure sufficient offsets are retired to neutralise our carbon emissions.
The total portfolio of offsets purchased and retired to date includes offsets issued under the Australian Emissions Reduction Fund, the Gold Standard, the Verified Carbon Standard, the New Zealand Emissions Trading Scheme and the Clean Development Mechanism.
Our purchased offsets have come from over 40 separate projects to date including:
When purchasing our offsets, we look for opportunities that deliver not only accredited and verified emissions reductions, but also provide health, education and additional social and environmental benefits and infrastructure for local communities in the areas in which the offset projects are delivered.
We use a forward purchasing model to meet our carbon neutral commitment. This type of model calculates forecast carbon emissions for the forthcoming year using the actual carbon emissions reported in the prior year's audited carbon inventory.
Climate Active Public Disclosure Statement - 2019-2020 (PDF, 707KB)
National Carbon Offset Standard Report - 2019 (PDF, 550KB)
National Carbon Offset Standard Report - 2018 (PDF, 592KB)
National Carbon Offset Standard Report - December 2017 (PDF, 406KB)
National Carbon Offset Standard Report - December 2016 (PDF, 588KB)
National Carbon Offset Standard Report - December 2015 (PDF, 475KB)
National Carbon Offset Standard Report - October 2014 (PDF, 414KB)
National Carbon Offset Standard Report - October 2013 (PDF, 692KB)
National Carbon Offset Standard Report - October 2012 (PDF 422KB)
Beyond Carbon Neutral Report - September 2011 (PDF 1.1MB)
Carbon Neutral Update - September 2010 (PDF 2.3MB)
Our environmental targets, assurance and certifications help us operate more efficiently while addressing key environmental challenges.
We’re helping our customers take action for the good of the environment and their business.
We’re integrating natural capital considerations into our day-to-day decision making and risk assessment processes.
We’re working towards minimising waste and reducing consumption.
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